In the current economic climate, your website’s conversion rate is more important than ever. Here are five reasons why conversion rate optimization should be your top priority.
Reason 1: The obvious one—you get more customers, free
The obvious reason to improve your conversion rate is because you want more customers without having to spend a penny more on advertising. But there are other, even better, reasons…
Reason 2: The “slight edge” phenomenon
In many competitions, “the winner takes all” (or at least “the winner takes most”). This is particularly true of internet marketing.
This has an important implication: if you want to be twice as profitable as your competitors, you don’t have to be twice as good as them. You just have to be slightly better than them. This phenomenon is sometimes called the slight edge.
The horse on the right has the slight edge:
In particular, you need to have a higher profit-per-visitor than they do. Small increases to your profit-per-visitor can have enormous knock-on effects to your business’s profitability and success.
A word of warning: this is no reason for complacency. Once you have the slight edge over your competitors, you need to make sure you stay ahead.
Reason 3: Conversion rate optimization makes financial sense—because your profit is surprisingly sensitive to your conversion rate
The following diagram shows how a modest increase in conversion rate—say 50%—can have an enormous effect on a company’s profit:
An increase in conversion rate of just 50% can result in a 500% increase in your profits.
That’s because the profit from the additional conversions goes straight onto your bottom line. In fact, a 10% change in conversion rate can mean the difference between making a profit and making a loss.
Reason 4: Conversion rate optimization makes your business more robust
When your conversion rate increases, suddenly you can afford to advertise in other media (online and offline)…which makes your company much more robust.
This can create a “virtuous circle”* of benefits for your company, and a vicious circle for your competitors.
* by the way, a virtuous circle is a “vicious circle in a good way”.
Reason 5: The first-mover advantage
Here’s a final reason why you should be taking action now to improve your conversion rate: because if your competitors aren’t doing it already, they will be soon. And there’s an enormous advantage to being in the lead rather than lagging behind. Once you’re ahead, you gain money; if you’re always playing catch-up, you’re losing money.
Does your business depend on “free traffic” or “SEO”?
If so, here’s a special note for you:
If your web business depends on “free traffic” from Google or other search engines, here are the benefits you’ll get from improving your conversion rate:
- The obvious benefit: You can generate more money “out of thin air” from your existing rankings.
- Your customers will like you more, so there’s more chance of them staying with you for longer.
- Your increased conversion rate will mean you can profitably advertise in different media—such as PPC, affiliate marketing or offline—which means your business will be much more stable. You’ll no longer be “hooked” on free traffic, and no longer at the whim of a Google algorithm change.
- If you do it right, increasing your conversion rate will make your website more appealing to visitors, so other sites are more likely to link to it.
So what now?
We hope you found that useful. We look forward to hearing your thoughts. (Please post your comments below.)
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Good writing. Keep up the good work. I just added your RSS feed my Google News Reader.
Matt Hanson
Good reasons (love the graphic)
And you’re back!
Great article…
I guess small companies are more advantaged from this point of view and they’d better put there asses to work. This is the moment to get ahead of the ugly big corporate monsters.
Hope to get more of you in the near future
Interesting read. Reason 2: The “slight edge” phenomenon makes a lot of sense.
You guys don’t have frequent update but the article you’ve written ROCKS. Thanks, CRE team.
This is the best explanation I have seen yet for working on your conversion. Keep up the good work.
“Just a 50% increase in conversation rate.” We’re struggling to even get a 1% increase and we’re following a lot of your tips.
Shannon,
I believe you may have misread adding an additional 50% to your existing conversion rate, not converting an additional 50% of visitors.
In many fields adding 1% to the conversion rate would be fantastic. One of our clients was wrapped when we took his consumer electronics store from 2.5 – 3.8%. Added close to 50K to the bottom line!
Cheers,
Rich – Zen Net Solutions
This is a great summary of the importance of Conversion Rate Improvements!
Very nice and succinct post on the benefits of conversion optimisation.
If you don’t get the traffic in the first place, then how on earth can you do ANY split testing? I’d also like to state that you only work with people who already have lots of traffic.
Hi Paul,
That’s a good point. Websites that already have traffic are at a big advantage over those that don’t, and, to some extent, it’s a Catch 22 situation; you can’t optimize your conversion rate because you don’t have traffic, and you can’t afford traffic because you haven’t optimized your conversion rate.
Don’t worry though—here are some extremely powerful things you can do now:
(i) carry out usability tests, (ii) sell the product face to face (or speak with people who sell it face to face) so you can learn the common customer objections, (iii) focus on a different goal that will be an approximate indicator of success; for example, aim to capture leads rather than going for direct sales…or maybe just measure click-throughs to the next page, (iv) Look to see what’s already working in your marketplace, in terms of headlines, page layouts, offers, etc.
For more ideas, see this article.
At 399Retouch we do no paid advertising, so increasing conversion percentage is our primary way to increase sales of our photo retouching service. I appreciate your stressing the importance of this, and your guidance on how to achieve it.
I couldn’t agree more. Plus, I’d suggest one additional advantage: Conversion rate optimization can become a “business asset.” Unlike PPC, it can give you a sustainable advantage over competitors.
Any advice on how to increase traffic? I have implemented most of your tips and are having a conversion rate of 10% but I need more traffic…
Hi Claudia,
If your conversion rate is higher than that of your competitors, you should be able to outspend them in all advertising media.
If that’s the case and you’re still struggling, perhaps you’re not focusing on your target audience as effectively as your competitors are. (Either that or you’ve saturated your market, but I suspect you’d know if that were the case.)
Perhaps you should go through your analytics and see if you’re paying for unwanted “junk” traffic. Be particularly careful to look at what the search terms are (that is, what your visitors are actually typing in), rather than just the bid terms.
Great word of advice on the need to maintain your achievements once they have been reached. So many companies think once they have success with their website it will stay and requires no attention – think again!
Great article! I am a big believer in CRO I really think that it is super important to focus on in this day and age. Great analogy with the horse race, makes perfect sense.
Good article, thanks.
Great article. I really need to work on increasing my traffic and conversion for sure. The question is how, but I’m confident it can be done.
Nice article! I particularly liked the graphic in point #3 highlighting the multiplier effect of conversion rate improvements. You are right on the money when you say:
“a 10% change in conversion rate can mean the difference between making a profit and making a loss.”
Sometimes I think we get fixated with big percentage numbers and forget that even a small percentage increase in conversion can deliver a big boost to the bottom line. When CRO is done right, every point counts and every point pays.
For businesses not getting a lot of traffic, you could always use a short PPC campaign to split test pages. If you choose your keywords carefully you’ll get a targeted hit of traffic that might only cost you $100 – $200. It’s a great way to test content and new niches.
#2 is so true, the difference between winning and having money to invest in generating more leads and losing – laying off or backing off on marketing is often very small. If I get 100 people to my website and convert 4 to buyers vs three, my revenue has gone up 25 percent at practically the same marketing costs. Thanks for the good points
Nice article. I recently wrote out my first serious online business plan, and started putting up my first serious website. Now I just have to get some serious conversions
Conversions and SEO are related, but they also differ. Conversions can be increased by selling better. SEO is generally improved by informing better. These are not mutually exclusive, but it is possible to vastly improve either conversions or SEO without improving the other almost at all. Both should be specifically targeted and the website should be upgraded with both in mind.
>>paying for unwanted “junk” traffic<<
To analyze this is soooo important – Most people just have a look at their adwords accounts where they see their bid terms, but not the real search term. Have a look at your servers logfiles to get the real data. Find negative keywords to apply to your ppc campaigns.
Actual search terms can be monitored within AdWords reports as well. There’s a button called see search terms in keywords reports where you can get detailed information. There’s no need to go through log files and it is much more effective since you can relate all search terms with your conversion metrics.
Also if you have linked your AdWords account with Google Analytics you can also check matched search query reports in order to see how actual search terms perform on your website.
Thanks for the article. The use of the graphics really sum up nicely the importance of optimisation.
Excellent points made.
Over the years, I’ve experienced the fast growth of several companies who just keep pushing their ‘slight edge’ to DOMINATE their niche or sector. We’re talking multiple millions. So thanks for this reminder.
You detail the benefits well.
Wonderful post. We recently started using a new service called mixpanel.com to do just what you’re describing and its been work *very* well.
Good Stuff. I just subscribed to the rss. Conversion is really important and I agree with the benefits.
This is something I really need to get going on my site. I’m on the slow path to dominating the wholesale industry. Hopefully, this will make the slow path a bit faster. Thanks.
I love all your work, you are so honest and loyal about everything you do. I appreciate it a lot.
Thanks from Denmark,
Mikhael
Very good post, Its very rare I agree with everything said but it all makes perfect sense. I strongly recommend split testing (or A/B testing) your website when making any changes
What is generally overlooked is product. Sounds self evident, but if you offer a much better product than your competitors, then you have no trouble getting better conversions by making minor tweaks.
Again, it sounds really simple but in the end, that is the truth.
Thanks for taking on this subject. We all have become keenly aware a click does not a buyer make… and we need all the buyers we can find these days.
To that end there is a new Free tool that increase conversion rates for paid search campaigns: Conversion-Widget.com
This uses Dynamic Keyword Insertion to personalize the landing page so it reflects the keywords used. With good design, and relevant products and content, it is astonishing how powerful this is at increasing online conversions. And, it’s completely free.
Great article! A really simple and easy to understand explanation of conversion rate optimisation! This will prove really useful in the future! Thanks for sharing!
Excellent article again guys. This is the simple reason we focus on CRO for our vertical clients. I think it’s good to point out that combining this with SEO approaches like linkbuilding can also have a dramatic impact. Thanks!
There are many good points in the above post, however, one which really stood out to me was: “Your increased conversion rate will mean you can profitably advertise in different media—such as PPC, affiliate marketing or offline—which means your business will be much more stable.” — it makes sense that affiliates making money are naturally going to stick with you… and that really will create a “virtuous circle.”
“This has an important implication: if you want to be twice as profitable as your competitors, you don’t have to be twice as good as them. You just have to be slightly better than them. This phenomenon is sometimes called the slight edge”
Interesting way of seeing the world. I am totally obsessed with conversions and doing my best to improve our internet business (it’s a photo retouching service). So far getting traffic is hard but we found a lot of creative ways to get it. Time to increase the conversions!
Awesome points, really. Conversion rates should be right up there w/ getting as MANY quality visitors to your site as humanly possible. May not seem super fun to work on it, but good golly it can literally be the difference between success and failure. I just started using Clicktale, its crazy!! I can see exactly what my customers are doing and therefore thinking!! Great points.
Website owners often lack SEO and web marketing skills, and therefore find it hard to solve conversion-related problems. Even if the website has high traffic because of good rankings in organic search engines, a poor conversion rate alone can turn a good ranking/traffic success into a failure.
I really like the post. I think that pay per click is not a bad way to to start out with conversion rate but seo and sem will only get the clients to your site and to the door. Its your site that has to take over and make people actually make the transaction or your target goal. But great post, and I love that you and so many people feel the same way!
Great Post, Totally agree with that conversion rate is the most important factor of any website.
I got a question for you. Hope you can kindly help to answer.
When testing conversion rate using PPC. Different KWs bring in different conversion rate. One kw with three match types bring in different conversion rate. Some kws even doesn’t convert. How do I know which conversion rate is for my new product to give it to my JV partner as evidence? THX
You’ve made some excellent points and items for me to put higher up on my Action Plan; and to get going with your newsletter. Thanks!
When it comes to conversions: “God is in the details.”
Provided you measure and manage it’s all good… unfortunately, most people just don’t have time.
And, frankly, most business owners give you a shrug of the shoulders and a blank stare when asked about their conversion rate… they should get on this site and fast.
Love the profit graph. I’ve always concentrated on the revenue increase, but the fact that it comes without any extra marketing cost or overheads adds to the argument.
Great article, but your ‘share’ buttons are pretty well hidden!
Where is the cost for setting up and running the CRO in the diagram?
Very intersting post. thank you very much for the info. Very enriching site.
Thank you, Tomer
Any ideas, is paid traffic more conveting than seo traffic ?
There’s no hard-and-fast rule. Google AdWords allows a high degree of control, so conversion rates are often high because you don’t pay for traffic you don’t want. Banner advertising, on the other hand, is less controllable, so conversion rates tend to be lower.
Great persuasion article on CRO. Thes points will be very useful for my own projects!
I been really trying hard to win the SEO world and it is just been really hard. I have been doing adwards but I think its time to do something else as its costing me way to much per month. Thanks for the post!
At the beggining of any website, it is important to get people (your target market) to know about you. Therefore you need to spend some money to buy some ads for that purpose.
As the time goes by, you need to concentrate on SEO in order to generate more organic results.
The question is what is the ratio or paid and organic conversions. Is 50:50 good or bad?
There’s no ideal ratio. It’s good to not be dependent upon any one source of traffic, so it’s good to have a mix.